Crypto Assets Market Outlook: Market Direction, Token Differentiation, and Future Opportunities

As the weekend arrives, I have more time to think about market trends. I believe the true direction of the crypto assets market will become clear only after September. Considering factors such as macroeconomic resistance, summer liquidity constraints, and quarter-end rebalancing, substantial changes in the market may not occur until after the August holiday when participants return to the market. Recent market activity shows that the rise of most altcoins is mainly due to short squeezes. Traders are chasing after the rebound influenced by previous gains, but there is a lack of support from long-term holders. As expected, most of the tokens that surged experienced a similarly severe pullback afterward.

Ethereum has unexpectedly rebounded, and sectors that were hit hardest earlier, such as AI and coins, are leading this wave of rebound. In contrast, tokens with practical use, solid fundamentals, or buyback mechanisms, such as Syrup, Hype, and AAVE, have shown stronger resistance to declines and recovery capabilities. Although SPX belongs to coins, its structure is unique. From these phenomena, we can draw the following insights:

1. The demand for Bitcoin is real and enduring

Traditional capital is gradually entering the market through regulated channels such as ETFs. The nature of the capital supporting BTC is fundamentally different from previous periods, making large-scale BTC liquidation unlikely to occur unless impacted by macro events.

2. The internal differentiation of altcoins has intensified

Funds will eventually flow back to altcoins, but it will not cover everything. Only tokens with clear purposes and actual application scenarios are likely to attract these funds. That’s why I believe Ethereum will outperform other public chains. Regulatory clarity, increased DeFi utilization, deflationary mechanisms, and staking demand collectively form a strong positive cycle. At the same time, due to ETH not meeting expectations for a long time, there are still potential buyers waiting in the over-the-counter market.

3. Venture-backed Tokens Face Structural Risks

Token unlocks will continue to exert pressure on prices. In the case of insufficient liquidity, the continuous selling pressure from validators and early investors limits the upside potential. Therefore, I believe that the prospects for overvalued tokens listed on centralized exchanges are bleak. Especially for Cosmos ecosystem tokens, they face continuous selling pressure due to their validator reward structure.

4. Structural Advantages

With structural advantages, no venture capital unlock pressure, fair distribution, and completely based on attention. This is a purely speculative mechanism that is very effective in the early stages.

However, I believe this stage is coming to an end. The launch of a certain Token generation event and Trump Coin marks the peak of coin attention. After that, the heat of coins began to fade. Even in the rebound in April, the performance of a certain public chain was not as good as ETH - if everyone already holds the Token of that public chain, who will be the marginal buyer when the heat of coins fades?

Some coins may still perform well, especially those that have gone viral on TikTok or Instagram through influencers, beyond just crypto social media. These could still bring about asymmetric wealth effects. However, the era of “Pet Coins” as alpha is over. Only those coins with strong narratives and deep market understanding - things that people can collectively believe in - have real speculative value.

5. Future Market Trends

So, if coins are no longer the opportunity, what will come next?

My view is: the combination of AI and Crypto Assets.

If you follow my updates, you will know that most of my operations during this cycle - after certain early public chains and venture capital-supported Tokens - have focused on coins and AI.

• Just like during the DeFi summer, most early AI projects failed after the hype. However, projects that are truly based on practicality are quietly building in this bear market. We have already seen some of these projects emerging on-chain.

• As the coin profits dwindle, attention will naturally shift to new narratives. AI, with its clear practicality, is well-suited to become the next hot topic.

• Many AI x Crypto projects adopt a fair issuance model, echoing the narratives of certain projects mentioned earlier.

This is why I study and position myself in this field during calm market periods. There is no need to rush to establish a full position right now - but I believe that if the market rises strongly again, this field will hold the greatest asymmetric opportunities.